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Canadian Market Recap: Week Ended October 27

Fifty-Three Canadian M&A transactions closed this past week. Year to date, M&A closed deal count is 3.1% higher than the comparable period in 2016. The Canadian dollar depreciated by 1.61 cents, ending the week at 78 cents. The TSX underperformed the S&P 500 by 1.7% in U.S. dollar terms. WTI Crude oil rose by 4.0%, ending the week at $53.90 per barrel.

According to the Lead Left, heightened competition is driving direct lenders to remove certain covenants and maintenance tests that would otherwise have protected those lenders. The Lead Left warns that this current practice, combined with pressure that loan buyers are feeling to put money to work, is distorting the traditional checks and balances of sound credit underwriting.

Valitas Insights: Driving Growth in Your New Acquisitions

Part 1: Getting A Bang for Your Buck in Today’s Pricey M&A Market

This article is Part 1 of a 2-part series about driving growth in new acquisitions against the backdrop of today’s challenging M&A landscape. With valuations at record highs, it is more critical than ever for buyers to develop realistic growth plans for their target acquisitions. Part 1 of this series considers the steps buyers can take during the due-diligence stage to establish realistic growth objectives. Part 2 will explore a post-acquisition action plan for buyers aiming to meet their growth objectives.

Historically, 70 to 90% of M&A transactions fail to create value. In addition, potential buyers, both strategic and financial, now find themselves having to pay more for targets than ever before, with valuations in the global M&A market reaching record highs. Combining this propensity for deal failure with sky-high valuations, it is more critical than ever for buyers to realize growth in their acquired companies. With this challenge in mind, Valitas recently sat down with Todd Blair, Founder & Managing Partner of GrowthPoint, a Canadian advisory firm specializing in the planning and execution of growth strategies.

Valitas in the news…Our Q3 2017 Canadian M&A review was cited in Barry Critchley’s column this past week in the Financial Post. The full Valitas review, highlighting robust performance in the Canadian middle market, is available here.

Canadian Zeolite Corp. (TSXV:CNZ), a Canadian company that engages in the acquisition, exploration, and evaluation of mineral properties in Canada, has agreed to acquire Earth Innovations Inc., a Canadian company that manufactures and distributes winter salts and de-icers. Total transaction value is estimated to be $1.3 million.

Industrials (Announced)

DBM Global to Acquire Candraft Detailing

DBM Global Inc. (OTCPK:DBMG), a U.S. company that together with its subsidiaries, operates as a steel fabrication and erection contractor primarily in the U.S., has agreed to acquire Candraft Detailing Inc, a Canadian engineering drafting company serving the steel building and bridge fabrication industry in North America. No transaction terms were released.

Emerald Health Therapeutics to Acquire Northern Vine Canada

Emerald Health Therapeutics, Inc. (TSXV:EMH), a Canadian company that together with its subsidiaries, produces and sells medical marijuana and cannabis oils in Canada, has agreed to acquire Northern Vine Canada Inc., a Canadian company that provides quality control laboratory services on raw materials and finished products to licensed manufacturers in Canada. Total transaction value is estimated to be $3.2 million.

Groupe Deschênes to Acquire Corix Water Products

Groupe Deschênes Inc., a Canadian company that through its subsidiaries, operates as a distributor-wholesaler of heating, ventilation, air conditioning, and refrigeration (HVAC & R) products and accessories, has agreed to acquire Corix Water Products Inc., a Canadian company that manufactures items such as pipes, valves, fire hydrants, water meters, and irrigation equipment. No transaction terms were released.

Keywords International to Acquire Volt Canada

Keywords International Limited, a subsidiary of Keywords Studios plc, has agreed to acquire Volt Canada, Inc., a Canadian company and full-service branch of Volt Information Sciences, that engages in the recruitment and placement of qualified candidates in Engineering, Technical, and Computer positions. Total transaction value is estimated to be $21.0 million.

Consumer Discretionary (Announced)

H.I.S. Co to Acquire Jonview Canada

H.I.S. Co., Ltd. (TSE:TYO), a Japanese tourism company that provides travel agency services worldwide, has agreed to acquire Jonview Canada Inc., a company that provides travel products and services to tour operators. Total transaction value is estimated to be $44.0 million.

Consumer Discretionary (Closed)

Sid Lee has Acquired YARD Agency

Sid Lee, Inc., a Canadian company that devises creative strategies for its global clients by transforming the consumer experience across various touch points, has acquired YARD Agency, a U.S.-based media agency that provides advertising services. No transaction terms were released.

Consumer Staples (Closed)

Ceapro has Acquired JUVENTEDC

Ceapro Inc. (TSXV:CZO), a Canadian biotechnology company that engages in developing and commercializing ingredients for human and animal health markets through the use of proprietary technology and renewable and sustainable resources, has acquired JUVENTEDC Inc., a Canadian company that offers development and commercialization of anti-aging products. Total transaction value is estimated to be $834 thousand.

Nordwind Capital Erste Industriebeteiligungen GmbH, a German-based private equity firm, has acquired Prairie Berries Inc., a Canadian company that engages in growing, producing, and promoting Saskatoon berries, ingredients, and gourmet products. No transaction terms were released.

Healthcare (Closed)

Ravenquest Biomed has Acquired Alberta Green Biotech

Ravenquest Biomed Inc. (CNSX:RVT), a Canadian company that provides management services and investments to the cannabis sector has acquired Alberta Green Biotech Inc., a company that produces medical marijuana. No transaction terms were released.

Information Technology (Closed)

N. Harris Computer has Acquired Syscon Justice Systems Canada

N. Harris Computer Corporation, a Canadian company that develops software solutions for customers in utility, public sector and schools, and healthcare group businesses in North America, has acquired Syscon Justice Systems Canada Ltd., a company that provides offender management solutions for correction agencies worldwide. No transaction terms were released.

Synstream Energy Corp. (TSXV:SHM), a Canadian company that engages in the acquisition, exploration, development, and production of petroleum and natural gas reserves in Western Canada, has agreed to acquire Kamcan Products Inc., a Canadian marijuana company. No transaction terms were released.

KNGS Exploration and Development to Acquire Asia Resources Oil

KNGS Exploration and Development Limited, a subsidiary of United Energy Group Ltd., a Hong Kong-based company, has agreed to acquire Asia Resources Oil Ltd., a Canadian company that is based in Pakistan. No transaction terms were released.

Other (Closed)

Dorman Products has Acquired MAS Automotive Distribution

Dorman Products, Inc. (NASDAQ:DORM), a U.S.-based company that supplies automotive replacement parts, automotive hardware, brake products, and household hardware to the automotive aftermarket and mass merchandise markets in the United States, Canada, Mexico, Europe, the Middle East, and Australia, has acquired MAS Automotive Distribution Inc., a Canadian company that designs, engineers, and produces premium quality chassis, steering, suspension and alignment components for the automotive aftermarket throughout North America. No transaction terms were released.

Formstack has Acquired Fast Forms

Formstack, LLC, a U.S.-based company that provides online form building services to build web forms within a browser, has acquired Fast Forms, a Canadian company that is the leading native form and survey builder on the Salesforce AppExchange. No transaction terms were released.

ROHA Dyechem Pvt. has Acquired Cambrian Solutions

ROHA Dyechem Pvt. Ltd., an Indian synthetic and natural color manufacturing company that services the food industry, has acquired Cambrian Solutions Inc., a Canadian chemical supplier company. No transaction terms were released.

Genesis Integration has Acquired Audability

Genesis Integration Inc, a Canadian systems integration and audio-visual company, has acquired Audability Inc., a Canadian communications technology company. Total transaction value is estimated to be $389 million.

[i] Includes all M&A transactions in which either the target or buyer is a Canadian private company.